How do you cash a us savings bond

It Might Be Time to Redeem Matured Savings Bonds, But Getting Cash Can Be Tricky

Anna Prior

Updated Sept. 9, 2009 11:44 p.m. ET

Remember those savings bonds your grandparents gave you for your second birthday?

Now might be a good time to dust them off and see how much they're worth, especially if decades have passed since you received them.

Savings bonds are sold by the U.S. Treasury to raise money for the U.S. government and can't be sold to other investors. In other words, you can only redeem them; you cannot trade or sell them.

ENLARGE

An advertisement for savings bond in the 1940s. Everett Collection

The bonds never expire, but they do reach maturity and stop accruing interest. Savings bonds that are no longer earning interest include Series E bonds issued from May 1941 through September 1979, Series H bonds issues from June 1952 through September 1979, and Series HH bonds issued from January 1980 through September 1989, according to the Treasury Department's financial-services Web site, TreasuryDirect.gov .

There are several ways to redeem savings bonds. Newer electronic bonds can be redeemed through TreasuryDirect.gov. For older bonds, call the Treasury's Savings Bonds Direct customer-service department at 1-800-245-2804 to find out how to proceed.

The fastest way to redeem Series E, Series EE and Series I paper bonds, says Ms. Harris, is to go to your local bank. But first check with a bank

to make sure it redeems bonds. She also suggests calling ahead to see what is required for redemption. Some banks may only redeem bonds for customers with longstanding active accounts.

Also, be sure to check the value of your bonds before heading to the bank branch. You can use the savings-bond calculator found in the tools section of TreasuryDirect.gov. If a bank teller informs you the bonds are worth less than the calculation you received online, call Savings Bonds Direct before authorizing redemption.

If you need cash, you also may want to redeem some of your bonds that are still earning interest. First check their current value and their earnings rate. If you're thinking of redeeming relatively new bonds, know that you can't redeem a bond for at least a year after purchase, and you'll forfeit three months' interest if you redeem the bond in its first five years.

The features of savings bonds have changed considerably over the years. Currently, the U.S. sells Series EE bonds that earn interest at a fixed 0.7% rate. The fixed rate for new EE bonds is set each May 1 and Nov. 1.

Meanwhile, the earnings rate for Series I bonds is a combination of a fixed rate, which applies for the life of the bond, and a semiannual inflation rate. The initial combined rate for bonds purchased from May through October of this year: 0%, reflecting the fact that consumer prices have actually declined.